Question: 24. A consultant recommends that a company hold funds for the following two reasons. Reason 1: Cash needs can fluctuate substantially throughout the year. Reason

24. A consultant recommends that a company hold funds for the following two reasons.

Reason 1: Cash needs can fluctuate substantially throughout the year.

Reason 2: Opportunities for buying at a discount may appear during the year.

The cash balances used to address the reasons given above are correctly classified as Reason 1 Reason 2

a. Speculative balances Speculative balances

b. Speculative balances Precautionary balances

c. Precautionary balances Speculative balances

d. Precautionary balances Precautionary balances

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